Major banks are likely to increase their variable home mortgage rates regardless of any movement in official rates by the Reserve Bank of Australia, according to a leading mortgage broker.

Loan Market Group Executive Director John Kolenda said despite the RBA leaving the cash rate on hold at 3.0 per cent for the past three months, major lenders were considering a lift in their rates independent of any RBA decision.

Mr Kolenda said the Commonwealth Bank of Australia had already broken ranks recently by raising its variable rate by 0.10 per cent due to increased funding costs.

“While predictions remain of a further easing in the cash rate by the RBA due to rising unemployment, there is evidence the major banks will no longer be moving in line with these changes and a strong likelihood banks will not pass on part or all of any future RBA rate cuts,” he said.

“They are considering lifting their rates against the trend and out of cycle because they claim their cost of funds is increasing and they are not only paying more for wholesale rates but paying more on deposits, which is another key area of their funding.

“This is a new phenomenon which will be of concern to mortgage holders.”

Mr Kolenda said the prospect of banks increasing their variable rates out of cycle could result in more home owners considering a fixed rate mortgage despite fixed rates rising by more than one per cent in the past few months.

“Although you might have missed the bottom of the fixed rate cycle, leaving a decision on locking in a fixed rate for much longer could be even more costly to home owners,” he said.

Mr Kolenda said so far there had not been a great deal of demand to switch to fixed rates, indicating the majority of home owners believed they would be better off sticking to variable rates while the economy remained in decline.

“Even though the fixed rates are higher now with the major banks offering 6.39 per cent to 6.59 per cent over three years, there’s a strong possibility variable rates could rise above that over the next three to five years,” he said.

Mr Kolenda said people considering a fixed rate, particularly if they required some certainty around repayments, should bear in mind lenders often have special offers on fixed rate products that help to reduce the overall interest rate and loan costs.

“I have seen evidence of many customers getting great discounts off both standard fixed and variable rates which can ultimately save thousands of dollars,” he said.

“By talking to your mortgage broker you can identify the best fixed and variable rates and get the broker to negotiate even better pricing than advertised.”